Global food trade has accelerated and is poised to hit a record in both volume and value terms, a report released by the Food and Agriculture Organisation of the United Nations says.
According to the FAO’s Food Outlook report published Thursday, “Higher international prices and freight rates combine to propel the cost of importing food to USD 1.75 trillion in 2021.”
The food outlook offers reviews of market supply and demand trends for the world’s most traded food commodities, namely, cereals, oil crops, meat, dairy, fish and sugar.
It also looks at trends in futures markets and shipping costs for food commodities.
“While global food trade has shown “remarkable resilience to disruptions throughout the COVID-19 pandemic”, rapidly rising prices of food commodities and energy pose significant challenges for poorer countries and consumers, who spend large shares of their incomes on these basic necessities,” the report said.
It said the global food import bill is forecast to reach a record high in 2021 and surpass US$1.75 trillion, marking a 14 per cent increase from the previous year and 12 per cent higher than the earlier forecast in June 2021.
“The increase is driven by higher price levels of internationally traded food commodities and a threefold increase in freight costs.
“Developed regions are foreseen to account for nearly 60 per cent of the global food import bill in 2021, recording a growth of 11 per cent.
“Developing regions, while accounting for the remaining 40 per cent of the bill, are forecast to see even higher growth in 2021, with their aggregate food import bill expanding by nearly 20 per cent from 2020, marking the fastest growth on record,” the report said.
It said record year-on-year growth is also anticipated for the most vulnerable country groups.
“The Least Developed Countries (LDCs) could see their food import bill rise by 16 per cent, while sub-Saharan Africa (SSA) and Low-Income Food Deficit Countries (LIFDCs) are expected to experience
even faster growth, with rates over 20 per cent compared with 2020,”.
The report noted that the higher import bills do not necessarily translate into more food inflows for vulnerable countries.
However, it said that the higher import bills are mainly on account of higher unit costs, rather than higher import volumes (quantities).
“Imports of staple foodstuffs are set to drive record bills for developing regions, while international purchases of high-value products are fueling the increase in the bills of developed regions.
“From a food group perspective, cereals, animal fats, vegetable oils and oilseeds are forecast to see the fastest expansion, both in absolute and percentage terms, with import bills, predicted to rise by USD 40.1 billion, USD 37.2 billion and USD 31.1 billion, respectively.
“More than 70 per cent of these increases are on account of additional purchases by developing regions, which bears testimony to the need to maintain basic staple availability.
“By contrast, developed regions account for nearly 70 per cent of the growth in high-value foods, notably fruits and vegetables, fishery products, and beverages.
“This reflects the swift economic recovery in these economies and the low-income responsiveness of consumers, even for these high-value food items,” the report said.
The global output prospects for major cereals remain robust, with record harvests expected in 2021 for maize and rice, although cereals utilization for human consumption and animal feed is forecast to grow faster, the report notes.
It said following a tight balance in 2020/21, preliminary forecasts for the 2021/22 season point to some improvements in the overall supply situation for oilseeds and derived products, but their respective end-season stocks could remain below average.
According to the report the global sugar output in 2021/22 is forecast to rebound after three years of contraction but still fall short of global consumption.
“The global sugar trade is foreseen to decline slightly because of reduced availability in key exporting countries and rising prices.
The report said world meat production in 2021 is forecast to expand, principally triggered by a swift output rebound in China, especially pig meat.
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“Notable demand-led output expansions are expected in all major producing regions, except Oceania. A growth slowdown in the global meat trade is likely due to anticipated declines in imports by leading importing regions, especially Asia and Europe,” it said.
Global milk production in 2021 is forecast to expand, with anticipated increases in all major producing regions, led by Asia and North America.
“Global trade in dairy products is also forecast to expand, amid the ongoing economic recovery from COVID-19 market disruptions.
“However, in recent months, the import growth rate has slowed down due to rising domestic production and sluggish consumer demand,” it said.
According to the report fisheries and aquaculture output in 2021 is forecast to grow by 2.0 per cent from the 2020 level, signalling that new market dynamics resulting from the pandemic – which exacted a heavy toll on this sector appear likely to endure in the long term.
“Fish trade is bouncing back despite high freight costs and logistical delays.
The report noted that financial instruments such as futures and options related to major agri-food commodities have failed “to attract the speculative fervour marked by other high-priced years”.
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